GitHub Acquisition Points Microsoft in a New Direction

7.5 billion dollars. Yes, a billion with a “B” and it’s how much Microsoft is spending to acquire GitHub, a git-based repository hosting platform. GitHub, which was valued at $2 billion in 2015, allows its 25 million users to collaborate code with other users. This has led to the creation of more than 85 million code bases.

The fourth largest acquisition in company history, the $7.5 billion purchase of GitHub comes just two years after Microsoft purchased LinkedIn for $26.2 billion.

Microsoft has historically overpaid for new acquisitions, stunting their own growth as a technological powerhouse, and many see the GitHub acquisition as another liability.

In 2011, Microsoft purchased Skype for $8.5 billion; it was initially valued around $3 billion. Since acquiring Skype, Microsoft has found it difficult to integrate Skype into its technologies, resulting in lost revenue. Many GitHub users fear this acquisition will render similar results, and the concern is already on display.

GitLab, one of GitHub’s largest competitors for git-based project hosting, grew by over 10,000 projects within the first hour of Microsoft announcing the purchase of GitHub. GitLab has tweeted that they’re seeing ten times the daily number of repositories since the announcement. While the specific reasons for an increase in the migration are unknown, if this trend continues it could be concerning for Microsoft.

The addition of GitHub to the Microsoft fleet will allow CEO Satya Nadella to change the direction of the company. Steve Ballmer, the previous CEO of Microsoft, was not a fan of open source coding. He went as far as calling Linux, an open-source operating system, cancer. Since Satya Nadella took over as CEO in 2014, he has used Linux to Microsoft’s advantage, releasing several major projects built on the Linux kernel.

Nadella seems to have a well-defined direction of where GitHub is headed and how it will positively impact Microsoft. On the day of the acquisition, Nadella wrote that there are “three clear opportunities” for GitHub. The opportunities include empowering developers, accelerating enterprise developers’ use of GitHub, and bringing Microsoft’s developer tools and services to new audiences. Nadella plans to operate GitHub independently and keep it as an open source platform.

Microsoft bought GitHub with the goal of becoming the leader in the open source market. Currently, public reaction has been mixed as many users are skeptical of what Microsoft plans to do with the platform.

With 7.5 billion dollars invested in GitHub, we’re at the edge of our seats waiting to see what Microsoft’s next steps will be.

19 IDEAS

19 IDEAS is a New York State Woman-Owned Business that believes in the power of integration. With specialties in design, development, marketing and PR, we fuse strategy together with creative solutions to discover the possibilities for our community and our clients.